Correlation Between Blue Chip and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Blue Chip and Growth Fund at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Blue Chip and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Chip Growth and Growth Fund Growth, you can compare the effects of market volatilities on Blue Chip and Growth Fund and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Blue Chip with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Chip and Growth Fund.
Diversification Opportunities for Blue Chip and Growth Fund
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Blue and Growth is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Blue Chip Growth and Growth Fund Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund Growth and Blue Chip is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Blue Chip Growth are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund Growth has no effect on the direction of Blue Chip i.e., Blue Chip and Growth Fund go up and down completely randomly.
Pair Corralation between Blue Chip and Growth Fund
Assuming the 90 days horizon Blue Chip Growth is expected to generate 0.95 times more return on investment than Growth Fund. However, Blue Chip Growth is 1.05 times less risky than Growth Fund. It trades about 0.21 of its potential returns per unit of risk. Growth Fund Growth is currently generating about 0.17 per unit of risk. If you would invest 1,824 in Blue Chip Growth on June 1, 2025 and sell it today you would earn a total of 200.00 from holding Blue Chip Growth or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blue Chip Growth vs. Growth Fund Growth
Performance |
| Timeline |
| Blue Chip Growth |
| Growth Fund Growth |
Blue Chip and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Chip and Growth Fund
The main advantage of trading using opposite Blue Chip and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Chip position performs unexpectedly, Growth Fund can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Growth Fund will offset losses from the drop in Growth Fund's long position.| Blue Chip vs. Mid Cap Index | Blue Chip vs. Mid Cap Strategic | Blue Chip vs. Valic Company I | Blue Chip vs. Valic Company I |
| Growth Fund vs. Mid Cap Index | Growth Fund vs. Mid Cap Strategic | Growth Fund vs. Valic Company I | Growth Fund vs. Valic Company I |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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